The Ministry of Planning and Investment has suggested the Government move on with a major plan to equitize State-run commercial banks, saying that the Vietnam Bank for Agriculture and Rural Development (Agribank) should go public from now to 2020
According to the local new site Dan Tri, the ministry has completed a draft economic restructuring plan and when approved, it would be carried out in the next five years with a focus on slashing State holdings at some commercial banks to around 65%. The ministry will collect comments on the plan before submitting it to the Government next month.
As financial market restructuring is the highlight of the plan, the ministry expects the bank restructuring process to be completed by 2020.
As per the draft, banks would be able to slash its bad debt ratios while the number of ailing commercial banks would dip sharply. Lenders are projected to cut lending rates to the average level of developing countries, at around 5%, while up to 70% of commercial banks will meet Basel II governance standards.
Regarding policies, the ministry has proposed completing monetary and banking legal frameworks in 2020, including those for bank restructuring and bad debt settlement. The Government’s intervention and banks’ responsibilities for dealing with shortcomings, violations and risks will be appraised.
The Government is advised to carefully weigh licensing new banks and tighten rules on company establishment, capital contribution and share purchases by banks. Meanwhile, regulations on foreign ownership at local banks would be relaxed.
The ministry has also provided solutions to speed up the restructuring process by adjusting some laws and regulations on bad debt settlement. Vietnam Asset Management Company (VAMC) is ordered to buy bad debts from banks at market prices, especially from those put under special surveillance.
The ministry also wants ailing lenders to file for bankruptcy but the situation must not affect safety and stability in the entire banking system. The plan also includes strong measures against credit institutions and bank branches failing to meet capital and safety standards.
According to the ministry, the current restructuring of ailing banks and the financial system has been behind the preset goals. Many lenders have yet to raise capital given the ongoing tough financial market conditions.
The sector has seen slow divestment of State capital and poor restructuring of ailing non-bank credit institutions under State-run enterprises.